China Money Rate Climbs a Second Day as Cash Demand Set to Rise

By Bloomberg News -
Jan 14, 2013

China’s benchmark money-market rate
climbed for a second day on speculation cash demand will rise
before the Lunar New Year Holiday that starts Feb. 11.

The People’s Bank of China added 10 billion yuan ($1.6
billion) to the financial system today via 14-day reverse-
repurchase operations, according to a trader required to bid at
the auctions. The yield on the contracts has been kept unchanged
at 3.45 percent since September. Local markets will be shut from
Feb. 11 through Feb. 15 for the holiday.

“The loose liquidity won’t last long as the holiday draws
near,” said Wang Huane, a senior bond trader at Qilu Bank Co.
in Jinan, capital of the Shandong province.

The seven-day repurchase rate, which measures interbank
funding availability, climbed 14 basis points, or 0.14
percentage point, to 2.89 percent as of 10:25 a.m. in Shanghai,
according to a weighted average rate compiled by the National
Interbank Funding Center.

The one-year swap contract, the fixed cost needed to
receive the floating seven-day repurchase rate, rose one basis
point to 3.37 percent, according to data compiled by Bloomberg.

The yield on the 2.95 percent government bond due August
2017 was unchanged at 3.25 percent, according to the Interbank
Funding Center.